Online Digital Platform Operators that are Online Marketplaces have to register with HMRC and report details of people who sell goods and services to buyers from their platforms. This creates a new Customer Due Diligence (CDD) requirement. While HMRC is still building its new Digital Platform reporting service, online operators need to start their own CDD systems to ensure they capture and record the right data.
From 1 January 2024, digital platforms that facilitate the provision of services or the sale of goods are required to collect and verify information about sellers using their platforms, before reporting it to HMRC annually, along with details of each seller's income.
Platforms that 'facilitate' sales to third-party buyers are sites that bring sellers and buyers together like Airbnb, booking, eBay, Etsy, freelancer, Only Fans, and Uber (other platforms are available).
UK reporting by digital platforms is mandatory for platform operators who:
- Reside in the UK.
- Are managed under UK laws.
- Have a place of management in the UK.
The UK is following the Organisation for Economic Development (OECD)'s digital platform reporting model which aims to allow different territories to share tax data. Non-UK platforms will want to check their exposure to these under their own domestic rules.
Reporting applies in respect of sellers who:
- Provide personal services, e.g. delivering food, driving a taxi, or any other type of freelancing, e.g. accountancy, coding, tax advice or writing.
- Rent out property or transport.
- Sell goods.
There is no reporting obligation in respect of 'casual sellers'. These are sellers making fewer than 30 sales of goods and receiving less than €2,000 (approximately £1,700) for those sales in a year e.g. someone with a very part-time 'side hustle'.
There is no reporting obligation if you are only selling your own goods and services from your own platforms. Exclusions also apply for sellers who are low risk, including government, listed companies and large-scale sellers.
Reporting applies from 1 January 2024.
- The first year of reporting is for the year to 31 December 2024.
- The reporting deadline is 31 January, following the year end: i.e. 31 January 2025 for the year to 31 December 2024.
- Reporting is via HMRC’s digital platform reporting service (DPRS) (which is not yet active).
HMRC is still writing up its guidance on this, we have summarised the guidance to date see our new guide: Digital Platform Reporting
Reportable details about seller include:
- Name, address, contact details.
- Tax reference and place of tax residence.
- VAT or other sales tax reference.
- The country where the seller lives.
- The total amount paid to the seller for the reporting year (reported on a cash basis).
- The number of transactions for which the seller received payment.
- Any fees, commissions, or taxes you have withheld or charged.
- Bank account details to which amounts were paid.
- If the account details are different to the seller, give the name of the account holder and other identifying details about them, like address and date of birth
Useful guides on this topic
Digital Platform Reporting
NEW: Our subscriber guide explains: What is Digital Platform reporting? What is a digital platform? What are the digital platform reporting obligations? Who is excluded from digital platform reporting?
Online Sellers: Tax Overview
What are the tax implications of being an online seller? When does a hobby become a business? What is a side hustle? What expenses can online sellers claim for tax purposes? Are there special rules for taxing income? What are the VAT rules for online sellers?
Influencers: What expenses can I claim?
What expenses can online influencers claim for tax purposes? Are there special rules? What are the rules for VAT for online influencers?
HMRC targets online sellers
In August 2023 HMRC started to issue 'one-to-many' letters covering those they believe are trading and have taxable income connected with online marketplaces or online content creation. Ignore this kind of letter at your peril.
